>If T-Mobile wasn't in a distant fourth place in the US market, or if they'd been acquired by AT&T we wouldn't be seeing this, nor would we see Verizon and AT&T introduce their own versions of T-Mobile's JUMP program.
I'm not an economist, and I haven't looked into the details of the cell phone market in depth, but here's a possible alternative opinion. I'm not asserting that this is the case; just wondering if it might be.
Would T-Mobile be able to treat customers as well if they were more popular, or are they only in this position because their ratio of customers to cell towers, spectrum, and other capital is lower? And if the latter is true, isn't that an inefficient use of resources, which market forces (i.e. the merger) would have corrected if not for government intervention?
Ostensibly, VZW and AT&T enjoy certain economies of scale above and beyond T-Mobile given their significantly greater customer bases. T-Mobile has a perception of shitty service, which means they have to spend a metric shit-ton of money buying spectrum and building out their LTE network.
Do note that T-Mobile USA paid $225 million in "Interest expense to affiliates." The affiliate, in this case, is Deutsche Telekom, which owns T-Mobile.
If this had been structured as preferred equity rather than debt, then it would turn into dividends and move "below the line" on the income statement. T-Mobile USA would then magically be making a profit.
And of course, you're just looking at one quarter: Q2 2013. Q1 2013 was profitable. Q1 + Q2 was also profitable.
T-Mobile USA is not out of the woods yet. But they're in better shape than they were in 2011.
I'm not an economist, and I haven't looked into the details of the cell phone market in depth, but here's a possible alternative opinion. I'm not asserting that this is the case; just wondering if it might be.
Would T-Mobile be able to treat customers as well if they were more popular, or are they only in this position because their ratio of customers to cell towers, spectrum, and other capital is lower? And if the latter is true, isn't that an inefficient use of resources, which market forces (i.e. the merger) would have corrected if not for government intervention?